Buenaventura’s Q1 Surge: Silver Bright Spot in a Mixed Metals Landscape

Compañía de Minas Buenaventura S.A.A. (Buenaventura) delivered a robust first-quarter 2025 performance, with adjusted earnings and revenue surging despite mixed production outcomes across its metals portfolio. The company’s financial strength—driven by soaring silver production and higher metal prices—contrasts with operational headwinds in copper and gold, underscoring the complexities of its strategy. Let’s dissect the numbers and what they mean for investors.

Financial Resilience Amid Operational Challenges

Buenaventura’s Q1 2025 results highlight a stark dichotomy: strong financial metrics offset by uneven production trends. EBITDA from direct operations rose 34% year-over-year (YoY) to $126.3 million, while net income nearly doubled to $147 million, up from $67.1 million in Q1 2024. Total revenues climbed 25% to $307.7 million, fueled by higher silver sales and rising metal prices. The company’s cash position strengthened to $648 million, and its leverage ratio improved to 0.46x, reflecting prudent debt management.

Silver Shines, Copper and Gold Lag

The star of Buenaventura’s Q1 performance was silver. Production surged 0.6 million ounces (Moz) YoY, with Yumpag mine output jumping 136% as it reached full capacity. This growth offset declining production at legacy assets like El Brocal, where exhausted open-pit reserves halted zinc output entirely. However, copper and gold output fell sharply: copper dropped 21% to 12,198 metric tons (MT), while gold fell 24% to 27,918 ounces. Tambomayo’s gold production collapsed 67%, and Orcopampa’s output dipped 25%, driven by lower ore grades and planned mining sequences.

Costs also rose at key mines. Tambomayo’s gold cost applicable to sales (CAS) nearly doubled to $2,730/oz, while Coimolache’s CAS surged 104% to $2,160/oz. These increases reflect the challenges of sustaining production at mature assets, even as silver-focused operations like Yumpag drive efficiencies.

CAPEX Focus: San Gabriel’s Role in Future Growth

Buenaventura’s capital expenditure (CAPEX) priorities align with its long-term strategy. The $21.8 million allocated to the San Gabriel Project in Q1—now 79% complete—signals confidence in its potential. This gold-silver project, slated for commercial production by Q4 2025, could offset declines in legacy mines. Meanwhile, sustaining CAPEX of $125–140 million aims to improve operational efficiency and address tailings dam safety concerns.

The company’s April 2025 dividend receipt of $49 million from its 19.58% stake in Sociedad Minera Cerro Verde also provides a liquidity buffer. Cerro Verde’s copper net income rose 65% to $59.2 million, benefiting from higher copper prices ($4.65/lb vs. $3.97/lb in Q1 2024).

Risks and Opportunities Ahead

Buenaventura faces two critical risks:
1. Metal Price Volatility: Silver prices have dipped in recent months, potentially squeezing margins if production costs continue to rise.
2. San Gabriel’s Success: The project’s timely commissioning and production targets will determine whether it can offset declining output elsewhere.

On the upside, the company’s reserve growth—up 482 thousand ounces of gold, 61 million ounces of silver, and 253,000 tonnes of copper—provides a foundation for future expansions.

Conclusion: A Silver Lining for Patient Investors

Buenaventura’s Q1 results reveal a company leveraging its silver dominance to navigate a challenging metals market. While copper and gold headwinds persist, the Yumpag mine’s performance and San Gabriel’s progress offer clear pathways to growth. With a leveraged ratio of 0.46x and $648 million in cash, the firm is financially positioned to weather near-term volatility.

Investors should monitor two key metrics:
1. San Gabriel’s Q4 2025 startup: A delay could strain cash flows.
2. Silver prices: A sustained drop below $22/oz could pressure margins, given Yumpag’s CAS of $13.82/oz.

For now, Buenaventura’s focus on silver and disciplined CAPEX allocation make it a compelling long-term play in a sector where few companies can balance financial health with growth potential. The next 12 months will test whether its strategy can turn Q1’s financial gains into sustained operational triumphs.

Data as of May 2025. Analysis based on Buenaventura’s Q1 2025 earnings release and Form 20-F 2024.